ESTONIA may only have a small railway network of around 1000km, but it has been through a turbulent period during the last 20 years both organisationally and in terms of performance. Freight has suffered a serious, almost terminal decline in stark contrast with passenger traffic which has experienced a major revival. While the passenger business looks forward to an even brighter future, freight is finally on the threshold of an upturn.
Following independence from the Soviet Union and the establishment of a parliamentary democracy in Estonia in 1992, Estonian Railways (EVR) was established as a state-owned company. Five years later, passenger and freight operations were separated, with the formation of three operators:
- EVR Ekspress running international passenger services between Estonia and Russia
- Elektriraudtee operating Tallinn electric commuter services, and
- Edelaraudtee running all diesel passenger services and freight on the Tallinn - Pärnu/Viljandi lines.
Partial privatisation started in 2001 when Baltic Rail Services (BRS) purchased a controlling 66% interest in EVR with the government retaining the remaining 34% share. BRS investors included Rail World and Railway Development Corporation (RDC) from the United States, British companies Emerging Europe Infrastructure Fund and Jarvis Estonia (which pulled out in 2003), and Ganiger Invest OÜ, a consortium of Estonian entrepreneurs. However, privatisation was relatively short-lived, as the Estonian government decided to buy out BRS in 2007 and return EVR to state ownership.
Two years later, infrastructure management and freight operations were separated with EVR becoming a state-owned holding company, with two subsidiaries: freight operator EVR Cargo and infrastructure manager EVR Infra. However, this structure only lasted three years, before the two subsidiaries were made independent state-owned companies in 2012.
Today, there are two infrastructure managers in Estonia: EVR which owns most of the network and Edelaraudtee which is responsible for the Tallinn - Pärnu/Viljandi lines. There are also two freight operators: EVR Cargo which carries around 80% of the traffic and ERS, and two passenger operators: Elron, which runs domestic services using a modern fleet of Stadler EMUs and DMUs, and GoRail which provides diesel traction in Estonia for Russian Railways (RZD) daily Tallinn - St Petersburg - Moscow service.
Freight traffic on the EVR network was building steadily from a low point of around 23 million tonnes a year in 1994 to a peak of just under 45 million tonnes in 2006 when Russia decided to redirect export freight away from ports in Finland and the Baltic states to its own ports. Then in 2007, a statue commemorating the Soviet occupation of Estonia was removed, resulting in tensions with Russia and a further decline in traffic between the two countries. By 2008, freight traffic had fallen to around 25 million tonnes a year and has continued to decline further to around 11 million tonnes last year.
However, this year has seen a dramatic change with freight traffic increasing by 8.4% in the first three months. Mr Erik Laidvee, EVR’s chairman, believes this is the start of a freight revival. “We expect to carry 13 million tonnes of freight in 2018 which is a conservative estimate,” Laidvee told IRJ in Tallinn. Laidvee expects to benefit from the increase in container trains moving from Asia and especially China to Europe, while a 50% increase is expected on the two block container trains operating between Tallinn and the Moscow area.
In March, Hamburg Harbours and Logistics (HHLA), one of the biggest port and logistics companies in Europe, signed an agreement with the Port of Tallinn to take over the operation of Muuga port to the east of Tallinn. This will add to HHLA’s three terminals in Hamburg and its operation in Odessa, Ukraine, and is expected to boost rail freight. “This is one of the most important developments for rail freight in Estonia in the last 10 years,” Laidvee says.
“A schedule has been approved for a freight train to operate south to Odessa. We will have to guarantee the transit time, which is definitely in favour of rail. Another big issue is price.”
Laidvee also believes Estonian railways can benefit from shippers routing east-west freight through the country rather than further south to avoid a bottleneck at Brest on the Belarus-Polish border where freight is transhipped between 1520mm-gauge and standard-gauge trains.
The development of north-south traffic flows will be most welcome for EVR, as 70% of freight traffic currently moves east-west, while the reduction in freight traffic during the last few years means the network has the capacity to carry another 25 million tonnes a year.
Passenger traffic has increasingly plugged the gap left by falling freight volumes. Elron’s decision to renew its passenger fleet between 2012 and 2014 has certainly paid off, with passenger journeys increasing from around 4 million in 2013 to almost 7 million in 2016. “People are even switching from road to rail, and Elron is having to purchase extra trains to cope with demand,” Laidvee reveals.
EVR is investing to improve the quality of the infrastructure. It is currently upgrading the lines from Tapa to Narva on the Russian border and southeast to Tartu where the maximum line speed will be increased to 135km/h. The maximum speed on the Estonian rail network is currently 80km/h for freight and 120km/h for passenger trains.
The budget has been approved and EVR hopes to obtain a construction permit soon for an €8m project to reopen the 7.5km line from Riispere southwest to Turba by 2019. This could be the first step towards reopening the entire line west to the resort of Haapsalu.
Edelaraudtee has also been upgrading its railway. The Türi - Viljandi line has already been modernised at a cost of €21m, while work to upgrade the Tallinn - Rapla line was due to be completed at the end of 2017 at cost of €13m. Both projects were mainly funded through the European Union’s Cohesion Fund. In December 2017, a new passenger station was opened at Valdeku south of Tallinn.
“Safety is our number one issue,” Laidvee says. “Last year, we had eight casualties on the railway. This year has started badly with a big accident. A lorry travelling at 90km/h hit a passenger train injuring 12 people. The lorry driver was drunk and didn’t even brake.
“We plan to invest €27m this year and around €180m during the next 10 years. The biggest project will be the renewal of our traffic management system. We will replace the whole system with ERTMS during the next 10 years.” However, the project has not got off to a good start as the first tender is being disputed in court. Nevertheless, Laidvee hopes the court will decide soon, and he remains confident that the first stage of the ERTMS project will be completed within four years.
Laidvee is keen for EVR to be involved in the ambitious Rail Baltica project to build a 250km/h mixed-traffic standard-gauge line from Tallinn south to Riga, Latvia, Vilnius, Lithuanian and the Polish border to link the three Baltic states to the European standard-gauge network.
“We have already participated in some preliminary engineering works and studies for the freight and passenger terminals in Tallinn,” Laidvee reveals. “The Rail Baltica passenger station will be 2km from the centre of Tallinn, so it will need good coordination in planning. For the freight terminal at Muuga port, we are looking at a multimodal facility with direct reloading between trains operating on the two track gauges. We must do it correctly, otherwise it will be very costly.”
Laidvee also wants EVR to be responsible for regulating traffic on both railways. “It is not decided yet how it will work, but we want one rail regulator in Estonia,” Laidvee says. Laidvee believes the biggest flows of freight traffic for Rail Baltica will be to and from Finland, and he is optimistic about the prospects for the proposed railway tunnel beneath the Gulf of Finland from Tallinn to Helsinki. “I have no doubt it will be built,” he says. “If there is private funding it will happen sooner than if it requires public funding.”
With a predicted freight revival, continuing passenger growth, network modernisation underway, and the prospect of the completion of the Rail Baltica project in 2026, the prospects for rail in Estonia look promising.